I see the chances of additional restrictions to shorting (apart from the uptick rule) as being very real in the near future, and these could be introduced under the pretext of our financial fight against international terrorism.

by tom_p : "I see the chances of additional restrictions to shorting (apart from the uptick rule) as being very real in the near future, and these could be introduced under the pretext of our financial fight against international terrorism."

I agree totally and this whole idea really has me scared.

It doesn't matter how stupid the idea is. It doesn't matter that we traders could argue the benefits of market fluidity which short selling provides. It doesn't matter that it can be reasonably argued that Nasdaq is STILL overvalued (see http://www.elitetrader.com/vb/showthread.php?s=&threadid=2365). It is very possible that short covering has helped hold up the market post-WTC, but that does't matter either.

Irrational decisions result from fear and lack of understanding. We currently have an abundance of both in regards to short selling. "The squeaky wheel gets the grease" is a true aphorism. Some people are making noise and, whether their arguements (and fears) are valid or not, they will be heard.

What scares me most is a scenario where ONLY independent traders' short selling priveledges are taken away, in much the same way that <25K accounts can no longer day trade. The
market 'Big Boys' wield enough political power to avert any decision of this type against them. But independent traders would be a perfect 'bone to throw' to those misguided and angry activists seeking to abolish short selling in the name of 'Mom, baseball, and apple pie'.

Prohibiting independent traders from shorting would probably also sit well with market insiders who would then have exclusive use of this tool.

This will kill the trading volume and send traders to other markets. I can't see it happening. You can't sell a dollar bill for ten bucks forever! Valuation are still high and if Cisco's Tom Chambers' prediction of 50% of NDX going bust in the next 5 years, we will see NDX under 800 possibly 600 in our lifetime. No matter what Government or anyone does, at the end, things sell for their "true" value.

Originally posted by roger2 by tom_p : "I see the chances of additional restrictions to shorting (apart from the uptick rule) as being very real in the near future, and these could be introduced under the pretext of our financial fight against international terrorism."

the problem is that we, the traders are educated enough to understand the "misguidedness" of these anti-shorting calls. but the average american doesn't know what to sell a stock short is. and i am afraid some people in the government aren't faring much better.

If I am not mistaken the Chairman of the SEC is the final arbiter, the one who could actually decide yay or nay regarding shorting. Someone please confirm this, and that might be a place to start with letters, email, etc. before this thing gets on a roll and takes on a life of it's own.